Market Review

Malaysia:. The FBM KLCI (+1.2%) snapped a three-day losing streak as indexes constituent changes take effect at the close of the trading bell on last Friday. The lower liners rebounded, while the transportation & logistics (-1.1%) and energy (- 0.5%) sectors underperformed the positive broader market.

Global markets:. The US stockmarkets trended lower as the Dow sank 1.6%. as concern over the inflationary pressure re-surfaced. European stockmarkets were downbeat, while Asia stockmarkets finished mixed.

The Day Ahead

The FBM KLCI snapped the three consecutive sessions of losses on the back of bargain hunting activities after recent selldown, bucking the downtrend in the regional markets. Investors may continue to stay defensive amid the ongoing battle of the Covid-19 health pandemic and the recent political developments, but the downside risks may be cushioned by the rising daily vaccination rate as the government target to achieve 80% herd immunity by the third quarter of this year. Meanwhile, the constituents changes following the semi-annual review of the FTSE Bursa Malaysia Index Series will be taking effect today.

Sector focus:. Following the positive development on the daily vaccination rate in the country, investors may look out for stocks under the recovery theme sectors, such as consumers, financial services, property and shipping industries Besides, we may see some buying interest in the energy sector following recent decline. Also, we expect buying momentum to sustain in selected technology stocks.

The FBM KLCI snapped the three-session losing streak and trended higher, but still slightly below the EMA60. Technical indicators turned positive as the MACD Histogram has turned green and the RSI is above 50 level. We expect the key index to trade range bound below its resistance level at 1,600, while the support level is envisaged around 1,555-1,565.

Company Brief

Bermaz Auto Bhd’s (BAuto) 4QFY21 net profit surged 27.2x YoY to RM66.8m, driven by higher sales volume from its domestic operations, though this was partly offset by the lower sales volume from the Philippines operations. Revenue for the quarter jumped 11.42% YoY to RM641.2m. A fourth interim dividend of 1.5 sen single-tier dividend per share and a special dividend of 1.75 sen single-tier dividend per share was declared. (The Star)

Ipmuda Bhd, whose shares have been suspended since noon on 17th June 2021, has announced that it has signed a slew of Heads of Agreement to acquire several renewable energy (RE) plants and healthcare assets totalling RM192.4m, in line with the group's growth plan. Ipmuda is acquiring a 70.0% equity interest in Telekosang Hydro One Sdn Bhd and Telekosang Hydro Two Sdn Bhd (collectively, Telekosang), as well as 100.0% of Telekosang Hydro One ASEAN Green Junior Sukuk for a total consideration of RM163.3m, to be satisfied by way of issuance of new ordinary shares in Ipmuda. Besides that, Ipmuda is acquiring 100% equity interest in Jentayu Solar Sdn Bhd for RM11.1m, also to be satisfied by way of issuance of new Ipmuda ordinary shares. (The Edge)

FGV Holdings Bhd will appoint an independent auditor to conduct an assessment of FGV's operations against the 11 indicators of forced labour provided by the International Labour Organization (ILO), as advised by the US Customs and Border Protection (CBP). The appointment is part of the group's commitment to taking all necessary steps towards the lifting of the Withhold Release Order (WRO) issued by the CBP on 30th September 2020 against palm oil and palm oil products made by the group and its subsidiaries and joint ventures. (The Edge)

The Indonesian authorities have revoked the plantation business licence (IUP) issued to TDM Bhd's Indonesian subsidiary PT Sawit Rezki Abadi (PTSRA) for its 10,000-ha land located in the municipality of Melawi, West Kalimantan, which is expected to result in a financial impact amounting to RM3.5m on the group. The decision to revoke the IUP was made on the basis that the property has not been developed since 2015. PTSRA is currently consulting its legal counsel and in the process of making an appeal to Indonesian authorities. (The Edge)

A joint venture (JV) between Petra Energy Bhd and Uzma Bhd has secured a contract from Petroleum Sarawak Bhd (Petros) for the exploration, development and production of petroleum in Block SK433, onshore Sarawak. The 29-year contract was secured by Petra Energy Development Sdn Bhd (PEDSB) and Uzma Engineering Sdn Bhd (UESB) JV, however, is not determinable as it is based on the production of the asset. (The Edge)

Apollo Food Holdings Bhd’s Johor Bahru manufacturing facility has resumed operations after a thorough disinfection was carried out on the premises. Its subsidiary had received notice from the Ministry of Health (MoH) to resume operations at the premises, which was suspended on 15th June 2021. (The Edge)

Opcom Holdings Bhd plans to raise RM22.6m via a private placement involving 30.0% of its share base to fund its existing and future contracts, and for working capital. This marks its second cash call this year, after it completed in April 2021 a private placement involving up to 10.0% of its issued shares. Opcom is also undertaking an employees’ share option scheme (ESOS) with the number of new shares allotted not exceeding 30.0% of its total issued shares. The proposals are expected to be completed in 2H21. (The Edge)

Kerjaya Prospek Property Bhd is buying a piece of leasehold land in Petaling Jaya, Selangor for RM82.0m. Its wholly-owned subsidiary Pixel Valley Sdn Bhd had entered into a sale and purchase agreement with Roset-BLG Sdn Bhd. The exact use of the land has not been determined at this juncture, which serves landbank for Pixel Valley’s property development activities. (The Edge)

Source: Mplus Research - 21 Jun 2021